Are you obliged to take out professional indemnity insurance?
Professional indemnity insurance (PI insurance) protects you in the course of your professional activity against claims brought by third parties — clients, suppliers or partners — who consider themselves to have suffered loss as a result of an error, omission or negligence on your part.
It typically covers:
- errors in advice or service provision (incorrect recommendations, failure to provide adequate information)
- unintentional omissions in the performance of a service
- financial loss suffered by a third party (loss of income, commercial damage)
- legal defence costs incurred in certain cases
It does not replace legal expenses insurance or public liability insurance.
Under Luxembourg law, several professions are legally required to hold professional indemnity insurance in order to practise. These include (non-exhaustive list):
- architects and engineers
- notaries
- estate agents
- medical and paramedical professions
- lawyers
- …
To check whether your profession is subject to a legal requirement, consult the official portal guichet.lu
What if your profession is not regulated?
Even where there is no legal requirement, professional indemnity insurance is strongly recommended for any self-employed activity involving intellectual or advisory services, such as consultants, trainers, graphic designers, developers, coaches and data managers.
In these fields, an error or a delay in delivery can result in significant commercial loss for your client — and therefore a claim against you. Without cover, your personal assets may be at risk.
These three types of cover are often confused. Here is how to distinguish them clearly.
| Insurance | What it covers | What it doesn’t cover |
|---|---|---|
|
Professional indemnity insurance |
Damage caused to third parties in the course of your professional activity + defence costs | Your own losses, disputes where no third party has suffered loss |
|
Legal expenses insurance |
Legal fees, legal advice, proceedings | Financial compensation for damage caused |
| Business interruption | Compensation to cover any loss or expenses resulting from a reduction in your business activity following an incident | Intellectual errors or errors in performance |
In summary: professional indemnity insurance compensates for loss suffered by a third party. Legal expenses insurance funds your defence. Business interruption cover compensates for losses in the event of a claim.
Luxembourg hosts a significant number of cross-border self-employed professionals who reside in France, Belgium or Germany but carry out their activity within Luxembourg.
In this case, Luxembourg law applies to your professional activity, regardless of your place of residence.
Points to watch:
- Check that your professional indemnity insurance policy covers Luxembourg as a geographical area
- Ensure that the levels of cover meet local requirements
- If you also operate in your country of residence, inform your insurer to avoid any territorial exclusions
The choice of professional indemnity insurance depends above all on your business sector and the risks associated with it. Here are the points to review before signing:
- The nature of the risks covered: ensure that the cover matches the specific features of your profession (intangible risks, advisory services, personal data, etc.)
- Levels of cover: certain regulated professions are subject to statutory minimums. For others, tailor your cover according to your turnover and the value of the assignments you undertake
- Limits per claim and per year: two distinct concepts that should not be confused
- Retroactive cover: a robust policy covers events occurring before the policy inception date
- Claims reporting period: check how long a third party may bring a claim against you after the end of a contract
Exclusions to check
Every professional indemnity insurance policy contains exclusions. The most common are:
- intentional misconduct or fraud
- damage caused to your own property
- fines and contractual penalties
- activities carried out outside the scope declared at the time of taking out the policy
Read the general terms and conditions carefully, and do not hesitate to ask for an explanation of each exclusion clause before signing.
- Professional indemnity insurance is mandatory for many regulated professions in Luxembourg
- It is recommended for all self-employed professionals, particularly in advisory, service or intellectual fields
- It does not replace legal expenses insurance or public liability insurance
- The choice of policy should take into account the specific risks of your activity, levels of cover and exclusions
Originally published in May 2023 and updated in March 2026.
Our agent assess your professional situation and offer a solution tailored to your activity in Luxembourg.
Yes. Professional indemnity insurance premiums are treated as deductible business expenses within the scope of your self-employed activity in Luxembourg. For the specific rules applicable to your situation, consult your accountant or the Luxembourg Inland Revenue (Administration des contributions directes).
In principle, no. Under an employment contract, the employee’s civil liability is covered by the employer. Professional indemnity insurance is intended for self-employed individuals, freelancers and other independent professionals.
Professional liability insurance covers damage caused to third parties in the course of your business, whilst business interruption insurance compensates you if your business has to cease trading following an incident.
In practical terms, professional liability insurance comes into play if your incorrect advice causes a client to lose money. Business interruption insurance, on the other hand, compensates you for the loss of turnover if a fire prevents you from working for several weeks.
- Professional Liability: protects your liability towards third parties (clients, partners)
- Business Interruption: protects your own income in the event of a claim
These two coverages complement each other. We offer solutions tailored to your sector of activity to cover all these professional risks.
Translated with DeepL.com (free version)
This depends on the terms of your policy. Some policies extend cover to individuals working under your responsibility. If you engage subcontractors, make sure to check this point explicitly with your insurer.